Monday, May 16, 2011

Fear the Boom and Bust - Hayek versus Keynes

Many of you probably know Keynes. He is the guy who teaches something like this: "If you wanna make glass-man wealthy you need to brake all glasses in the town." He thought spending creates wealth while in fact all the nations, companies and individuals in the history rose to glory on their or others savings. Who cares his ideas contradicts with the basics of economics like "finite resources", his ideas are politically convenient and very popular among western governments, technocrats and main stream managing the money. In the west it probably looks really cool to masses, "government spends money when people cannot".

There is another economic thought on the opposite site, Austrian School and Friedrich Hayek who teaches politically inconvenient hard realities of economics. created to excellent clips to explain the clashes of theories from these two opposite sites of economics. The tone of the clips do not try to hide on which side they are (these are pro Hayek clips).

"In Fear the Boom and Bust, John Maynard Keynes and F. A. Hayek, two of the great economists of the 20th century, come back to life to attend an economics conference on the economic crisis. Before the conference begins, and at the insistence of Lord Keynes, they go out for a night on the town and sing about why there's a "boom and bust" cycle in modern economies and good reason to fear it."

"According to the National Bureau of Economic Research, the Great Recession ended almost two years ago, in the summer of 2009. Yet we're all uneasy. Job growth has been disappointing. The recovery seems fragile. Where should we head from here? Is that question even meaningful? Can the government steer the economy or have past attempts helped create the mess we're still in?

In "Fight of the Century", Keynes and Hayek weigh in on these central questions. Do we need more government spending or less? What's the evidence that government spending promotes prosperity in troubled times? Can war or natural disasters paradoxically be good for an economy in a slump? Should more spending come from the top down or from the bottom up? What are the ultimate sources of prosperity?"

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